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Employers Cautious Toward Exchanges, Embracing CDHPs

#Stephen Miller, CEBS

By Stephen Miller, CEBSOct 25, 2012

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U.S. employers say it will be mostly business as usual regarding their health care benefits in 2013, but they are planning more extensive design changes as the Patient Protection and Affordable Care Act (PPACA) is implemented fully, according to a survey by the nonprofit Midwest Business Group on Health(MBGH) in collaboration with The Benfield Group, a health care consultancy.

The survey was conducted in August 2012 among self-insured (77 percent) and fully insured (23 percent) U.S. employers across a variety of industries. Employers ranged in size from large (29 percent with more than 5,000 employees), to midsize (38 percent with 1,001 to 5,000) and smaller (33 percent with less than 1,000).

Many to Adjust, Not Drop, Coverage

Among the key findings:

• In preparation for the 40 percent excise tax on high cost “Cadillac” plans scheduled to take effect in 2018, 31 percent of employers indicated that they plan to reduce their benefits in 2014-2016, with 41 percent responding they will do so for 2017-2018.

• For the next few years, there is little indication that employers plan to drop health care coverage and give employees money to buy health care coverage elsewhere.

• Only 9 percent of employers indicated that they planned to participate in state health insurance exchanges when they begin in 2014-2016. While there is interest in private health insurance exchanges, at this time only 4 percent believe they will use these for active employee coverage in 2014-2016, while 11 percent indicated that they will move toward private exchanges to subsidize Medicare supplemental coverage for post-65 retirees.

Replace all benefit options with one or more account-based plans (HSA or HRA).

17%

22%

28%

29%

Change their definition of part-time employment.

10%

12%

26%

26%

Cap employer contributions.

11%

13%

18%

20%

Change to premium contribution unit pricing (premiums increase incrementally based on number of people on the plan).

10%

14%

18%

19%

Adopt a salary-based premium contribution strategy.

8%

8%

9%

9%

Source: MBGH and The Benfield Group LLC

“Employers still believe that health benefits are vital to attract talented employees and maintain a productive workforce,” said Scott Thompson, president of the healthcare practice at The Benfield Group. The research found that most employers, especially those with more than 200 employees, will not drop employee benefit coverage in the foreseeable future; “instead, they’ll control costs in other ways like implementing CDHPs, basing premium contributions on the number of dependents covered (unit pricing) and reducing benefits to avoid the Cadillac tax,” he noted.

To obtain the full results of the August 2012 health care survey, e-mail MBGH (info@mbgh.org).